Jacqueline Shakespeare examines how FMCG leaders can navigate Donald Trump’s second-term uncertainty
As President Trump’s second term unfolds, global businesses are bracing for a period of heightened uncertainty. His proposed policies, ranging from sweeping trade tariffs to potential energy policy reversals, signal a return to the protectionist, unpredictable stance that defined his first term.
However, the unpredictability of a Trump presidency is nothing new for global businesses. His first term was also wrought with policy shifts that created ripple effects across industries. The food and drink sector, in particular, saw supply chain disruptions, fluctuating costs and shifting consumer demands as businesses scrambled to adapt.
Now, with Trump’s return, UK and global organisations must once again prepare for uncertainty, not just in trade but across international relations, business and economic strategy.
The real challenge isn’t preparing against any single policy change – it’s the need for businesses to build resilience and agility in the face of heightened volatility.
Uncertainty is the New Normal
The food and drink sector has been in a constant state of flux since Covid-19, and Trump’s tariffs are the latest addition to a long list of industry disruptors. Shifting consumer behaviours, inflationary pressures, and geopolitical uncertainty have all made long-term planning increasingly difficult.
A number of key trends have shaped the sector in recent years, and post-Covid, there have been increasing consumer demands to meet. The demand for healthier and more sustainable foods has risen, with almost 50% of shoppers eating healthier products last year, and sales of food in the ‘healthy snacking’ category increasing 39% in 2023 compared to the previous year. But tariffs on global supply chains could push up prices for these premium products making them much less accessible.
Another challenge tariffs pose is disrupting ethical sourcing and international supply chains, with businesses now facing a dual challenge: maintaining sustainability commitments while balancing costs. Finally, with inflation squeezing household budgets, value-for-money products are also gaining traction, and any additional tariff-related cost may accelerate this trend.
The common thread? Uncertainty. And if recent years have taught us anything, it’s that agility is no longer optional, but a prerequisite for survival. Businesses that can quickly adapt to shifting trade policies, consumer demands, and economic pressures will be best positioned to weather volatility. This means fostering closer supplier relationships, leveraging data-driven decision-making and investing in digital supply chain solutions to enhance visibility and responsiveness. Those who fail to evolve risk falling behind in an increasingly competitive landscape.
The challenge and opportunity
FMCG companies relying on global trade must now contend with a number of hurdles. The solution isn’t just about mitigating risk – it’s about seizing opportunity. The businesses that will thrive are those that embrace resilience, flexibility and agility.
So, where do the opportunities lie?
For companies that are willing to proactively explore alternative sourcing and regional production hubs, reducing exposure to tariff volatility will be a huge benefit, as diversifying supply chains is a much safer bet than relying on one source. A prime example is how some UK retailers adapted to post-Brexit trade complexities by shifting warehousing and fulfilment operations to European hubs, reducing costly border delays and ensuring smoother operations despite evolving regulations and tariffs.
As well as this, investing in localisation will strengthen sustainability credentials. With some consumers saying they are willing to spend 9.7% more for sustainably produced or sourced goods, it is a no-brainer for businesses to prioritise their sustainability credentials while also meeting consumer demands for ethical products.
Finally, leveraging AI for agility is a business’ best friend. Advanced analytics can help to predict shifts in demand, optimise pricing, and streamline logistics in real time, taking the guesswork out of your planning and being prepared for any scenario. It’s worth noting that we’re moving in the right direction, as recent research shows that the UK’s Retail and CPG sectors are already ahead in AI adoption, demonstrating its tangible impact on agility and efficiency.
Brands Leading the Way
Diageo, the spirits giant, estimates that the trade disruptions could dent operating profits by approximately $200 million if tariffs on Mexico and Canada are implemented. It has already shifted some of its production closer to key markets, reducing exposure to trade disruptions.
Given the uncertainty surrounding tariffs, Diageo has been strategically evaluating its supply chain to minimise potential cost increases. The company has diversified production hubs and strengthened local partnerships to insulate itself from sudden geopolitical shifts. This approach allows the business to mitigate the impact of these tariffs, and helps to build resilience in an increasingly volatile trade landscape.
Another great business case for this is Tesco, which has proactively enhanced its supply chain resilience by strengthening local sourcing partnerships and leveraging technologies.
This strategy not only mitigates risks associated with global trade disruptions but also aligns with consumer preferences for locally sourced products. By collaborating closely with local suppliers, Tesco has been able to reduce its reliance on international supply chains, minimising exposure to potential tariffs and geopolitical uncertainties.
In addition to local sourcing, Tesco has invested in real-time tracking and artificial intelligence to enhance supply chain visibility. By equipping UK containers with solar-powered sensors, Tesco monitors shipments 24/7, ensuring timely deliveries and reducing disruptions.
These initiatives exemplify how major food and drink companies can adapt to current trade challenges by fostering local partnerships and embracing technological advancements to build more resilient and agile supply chains.
Future-Proofing for 2025 and Beyond
The key challenge under a second Trump presidency isn’t any single policy – it’s the heightened unpredictability of global trade. The winners in the FMCG space will be those who take proactive steps to build resilience into their operations.
Now is the time to assess strategic vulnerabilities, rethink supply chains, and double down on agility. The UK food and drink sector has a chance to lead, not just survive, the next wave of global disruption. The businesses that build adaptability into their strategy, proactively address vulnerabilities, and embrace flexibility will not just navigate uncertainty, but will thrive in it.
The question isn’t whether tariffs will happen. The question is: are you ready for what comes next?
Jacqueline Shakespeare is a Consulting Partner at Sullivan & Stanley, specialising in helping clients develop expert leaders and navigate complex organisational change. With a career spanning multiple industries – including telecommunications, finance, and retail, she has worked closely with senior executives and teams to help them achieve their strategic ambitions.
